The Indian economy has continued to do well, with the IMF suggesting the country will be the third world’s largest economy by 2027. India envisions being a developed country by 2047, with studies by Deloitte indicating that it has to maintain a growth rate of 8-9% to achieve this goal. Some of the reasons attributed to this growth are the growing young workforce, the digital economy, and a government willing to undertake reforms.
In the third quarter of 2023, India’s GDP surpassed predictions by different analysts, with sectors like manufacturing recording significant growth. The GDP rose 7.6%, significantly differing from the 6.5% projection of the Reserve Bank of India (RBI).
The growth of the country’s economy could be attributed to the undying efforts of the government to see micro, small and medium enterprises (MSMEs) thrive. The government of India (GOI) provided subsidies of up to 80% to MSMEs to encourage Zero Defect Zero Effect practices in their operations. Furthermore, the GOI spent billions of dollars improving the countries’ infrastructure, offering businesses a conducive environment for growth.
A Growing Digital Economy and Manufacturing
The exponential growth of the digital economy has also contributed to the country’s overall economic growth. A report by the Finance Ministry indicated that one of the key drivers of this growth was the establishment of India’s Unified Payment System (UPI), which translated to significant savings. The report added that the online economy’s contribution to the country’s GDP had increased from 2014’s 4-4.5% and was projected to hit 20% by 2026.
Moreover, the digital economy could also be doing well because of the entertainment sector, or more specifically, the popularity of online gambling. For instance, a Yahoo Finance report suggested that the market share of online casinos in India was US$1.5 billion in 2023 and is forecasted to hit US$3.7 billion in 2030, growing at a CAGR of 12%. This increased popularity could be attributed to the convenience afforded by the online gambling industry, which ensures that gamblers can play casino games from any place. By offering games similar to those at physical casinos, like table games and slots, online casinos ensure that players have a similar gambling experience to that of a brick-and-mortar casino.
India’s economy has also benefited from the renewed emphasis on manufacturing, especially electronics. With conducive policies like Production Linked Incentives (PLI), the government has managed to attract several foreign investments, resulting in more jobs. Shri S. Krishnan, the Secretary of the Ministry of Electronics and IT, expressed the government’s commitment to improving the competitiveness of the electronics sector and facilitating exports in the subsequent phases of development.
Growth amid Challenges
Surprisingly, the economy continued to grow despite the challenges in the agricultural and service sectors. The agricultural sector was challenged due to monsoon inconsistencies, affecting traditional planting cycles. In the service sector, there was a decline to a seven-month low in October 2023 due to high competition, reduced demand, and increasing price burdens.
In summary, India’s consistent growth amid challenging global economic circumstances points to the country’s resilience and potential to become a world power. By maintaining this growth rate, the country will undoubtedly rise to be recognised among the world’s largest economies in the future.